No better way to game the economy by fooling everyone that inflation is perpetual and as long as its in the hands of the Fed, will continue.

By these means, this is exactly how the Feds & the largest of the banking cartel, can consolidate power & take over entire industries and countries by shattering all these expectations from the past decade (written into numerous contracts commerical, leases, etc) and introducing a deflationary shock.

In the end, devising these booms & busts consolidates industries/countries into fewer, favorable hands and the rest, more relient on debt.

Anyone know what debt levels were for companies in 1800s?

How about in the 1910s? How does that compare to the 1920s?

& I wonder how all of the above compare to debt levels of companies today.

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)

I have said my peace with respect to the USD. Keep in mind that you can have inflationary price increases within an otherwise deflationary environment if you have a currency crisis! Even if losses from toxic leveraged assets manage to outpace the printing press and continue to keep money velocity down, inflation can still emerge as the USD is traded downward against other fiat currencies in a race to escape a technically broken USD backed by a an insurmountable mountain of debt. Commodities, which as a group dictate the underpinnings of consumer prices (our measure of inflation), will rise against the dollar's decline. I see oil's move below $40 as highly unsustainable, creating the possibility for a kickback rally

The stage is being set for Weimar-style hyperinflation brought about by devaluation of the USD against the other USDX fiat currencies and by renewed geopolitical tensions as nations continue to vie for access to resources. A U.S. with a rapidly declining dollar is likely to flex its muscles to some extent to ensure accessas the Asian industrial machine begins to regroup.

Thankfully, I know of one investment that will rise in 2009 regardless of whether deflation or inflation wins out for the coming year: Got Gold?

Gold will go to $2,000 and beyond before this is all over. I see no way that such a level can be avoided given all the above.

Your argument, although cogent and well thought out, is based on speculation and circumstantial evidence......mine on the other hand is a treatise of telling travasties leading to a trail towards total tanking.

As an aside, do you really think that other nations are going to let America piss away its currency without taking appropriate counter measures???? We are not talking about some banana republic.

Inflationary and deflationary epectations are, by nature, equally speculative, dear Watson. :) What we have in a given moment does not define a trend, and anything could change at the drop of a hat when you're in unchartered territory like this. Our bodies of evidence, likewise, are equally circumstanctial. The question becomes, which scenario does a plurality of the evidence support.

What counter-measures do you propose other nations take to prop up the dollar? That would amount to a voluntary depression for the responding entity/ies. If currencies could simply be managed no matter what stuctural weaknesses are imposed by reckless spending and accelerating debt burdens, then we would lack the ample histories of failed fiat currencies through the ages..

There are a variety of counter measures such as voluntary devaluation ala Russia or repudiation like Equador, or trade barriers........we could go on and on all the way up to military entanglements(what do you think would happen to the dollar with a major miltary conflict......was that a Black Swan primping by us???).

Oil dropping 59% in one year is not speculative....it is direct evidence. So is companies cutting salaries. So is hotels cutting rates. So is airlines cutting fares. So is crashing house prices and falling property taxes and declining state revenues.

A politician saying he is going to do something???? Doesn't that sound like a speculation upon a speculation to you????